Himachal Pradesh Amends its Regulation for Deviation Settlement Mechanism

The Himachal Pradesh Electricity Regulatory Commission (HPERC) has finalized the amendments to its regulation on deviation settlement mechanism (DSM).

The state commission had proposed the amendments in May 2019 and had provided stakeholders with 30 days to revert with their comments and suggestions.

As proposed previously, the HPERC has included the concept of area clearing price, which is the price of a time block electricity contract established on the power exchange after considering all the valid purchase and sale bids after dividing the market across the constrained transmission corridors.

The state electricity regulatory commission also finalized the inclusion of provisions related to the daily base deviation settlement mechanism, which is the sum of charges for deviations for all time blocks in a day, excluding the additional charges:  day-ahead market (DAM), simple average area clearing price (discovered daily by the NLDC for the DAM), and time block deviation settlement mechanism which is the charge for the deviation for the specific time block in a day, excluding the additional charges.



The HPERC has also finalized the additional charges in case of violation of the requirements with regards to the sustained deviations. It has fixed a 0.5 MW deviation limit in any direction (positive or negative) for a time block of up to 10 MW. For the time block of up to 25 MW, the maximum permissible deviation is 1 MW.

For deviation of the time block up to 100 MW, the deviation of 2 MW is allowed while for more than 100 MW, the permissible deviation is 10 MW. Each violation will attract an additional charge of 10% on the time block deviation settlement mechanism.

Moreover, if the sustained deviation from the schedule continues for six-time blocks on or before March 31, 2020, the state entity (buyer or seller), will correct its position either by changing the sign of its deviation from the schedule or by restricting the sustained deviation to the permissible limits.

Apart from these, the commission has also made the changes to the proposed amendments in terms of the deviation limit. Moreover, it has doubled the deviation limit from the earlier proposed limits. The HPERC has also halved the number of time blocks allowed for correction of position from the proposed 12 to six.

The new regulations will come into force on the first Monday after the publishing of these amendments in the state gazette of Himachal Pradesh.

This year, Gujarat and Rajasthan have also come up with new deviation settlement regulations.